PPC Zimbabwe's 90% USD strategy faces ZiG test

PPC Zimbabwe is increasingly operating like a hard-currency business, with more than 90% of its revenue now earned in US dollars-a shift that has strengthened liquidity and positioned the cement producer as a rare debt-free player in Zimbabwe's volatile economy.

The company's strong US dollar inflows, driven by a growing base of cash-paying customers, have underpinned robust financial performance and consistent dividend payouts. However, looming government plans to transition toward a single domestic currency anchored on the Zimbabwe Gold (ZiG) could test the sustainability of this model.

Speaking at a recent capital markets day in South Africa, managing director Ndima Rawana said the company's revenue profile reflects the realities of Zimbabwe's market dynamics.

"The reality is that Zimbabwe has adopted a multicurrency model, and PPC Zimbabwe is actually a US dollar business. Over 90% of our sales are in US dollars, and just to give you perspective, in February, actually, it was about 98%," he said.

Despite the dominance of US dollar transactions, Rawana noted that the company still requires Zimbabwe Gold for statutory obligations, including tax payments and electricity bills to the state utility ZESA Holdings.

PPC Zimbabwe's strong cash generation has translated into solid earnings growth. Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 28% over the 10 months to January 31, 2025, building on a 29% increase recorded the previous year.

"In the last two years, we have declared dividends of about US$49 million," Rawana said. "Before that, over a ten-year period, only US$33 million was declared. This shows the momentum we are seeing."

The company's debt-free status has given it flexibility to reinvest in operations while continuing to reward shareholders. A notable shift toward upfront payments is also improving cash flows, with cash-paying customers rising from 22% in February to over 40% in March.

On the cost front, inbound transport remains the largest expense at 29%, followed by power at 25%. To mitigate energy costs, PPC Zimbabwe is rolling out solar projects at its Colleen Bawn and Bulawayo milling plants, which are expected to reduce electricity expenses by up to 50% while enhancing clinker production capacity.

Purchased clinker currently accounts for 18% of total costs, making efficiency gains in production a strategic priority.

While growth in Zimbabwe's construction sector is expected to sustain cement demand, analysts say the planned shift to a single local currency could disrupt companies heavily reliant on US dollar revenues.

For PPC Zimbabwe, the challenge will be balancing its hard-currency advantage with policy changes that may compel a return to local currency dominance-potentially reshaping margins, pricing strategies and overall competitiveness.